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Value for money in partnerships – a challenge to partnership brokers

Abstract: The use of multi-stakeholder approaches as a means of delivering international development commitments is growing. As development organisations work together to address ever more complex problems, partnership appears well suited to meet the many challenges they face along the way. While few would argue against the value of partnerships in the development context, it is important to consider the costs of those partnerships in real terms. The recently completed Skills for Negotiation project, implemented in Myanmar by a Canadian-led consortium that included the Partnership Brokers Association(PBA), provides an opportunity for partners and partnership brokers to reflect on the costs and benefits of partnership in the development context and ask some of the questions that emerge as partnership establishes itself as a substantive development paradigm.

Value for money– a challenge to partnership brokers

The Skills for Negotiation project in Myanmar, in which PBA participated as an implementing partner and for which a case study was completed[1], provided an opportunity for the project’s partners to reflect on value creation in the use of partnership for delivering development programming.

The case study presents the lesson on value creation by explaining that the objective of using a partnership approach for delivery was to “bring together a diversity of cultures, values, approaches and experiences to the benefit of local participants in the project”. The case study describes the difficulty that each partner faced in fulfilling the potential of their contributions and ensuring that their participation led to optimal project results. It concludes that whilst the partnership did not maximise its potential, it did support the effectiveness of the project in building the capacity of Burmese participants for collaborative approaches. The discussion of value in the Skills for Negotiation project focuses on the technical contributions of each partner and does not connect with other elements discussed in the case study related to the complex logistics, restrictive timelines for delivery, and donor requirements related to funding allocation and budget management.

This article proposes to borrow the value for money concept used in the humanitarian and development sector to (a) deepen the discussion on value creation in the context of partnerships for delivering humanitarian and development programming and (b) explore the role of the broker in creating a more complete understanding of the value of partnerships in the humanitarian and development sector.

Partnership and development / humanitarian practitioners each bring a different understanding of value to partnerships implementing projects and programs. Partnership brokers often define the value of partnership through its ability to generate resources, innovation, quality, legitimacy, buy-in, integrated approaches to problem solving, etc. Partnership brokers speak of efficiency, partnership effectiveness and impact.

There is little consideration, however, of the costs of using a partnership for delivering development activities in contrast to other relatively simpler and cheaper arrangements. Although value for money has already been introduced to the field of partnership and partnership brokering in infrastructure-oriented Public-Private partnerships, it is only just emerging as a consideration in partnerships for development and humanitarian programming. It has not yet become an essential part of the discussion when scoping such partnerships. The sections below present the concept of value for money, how it connects to partnership approaches, and some key considerations for partnership brokers working with partnerships in the development and humanitarian sectors.

What is Value for Money (VfM)?

Value for money (VfM) is not a new concept. It has been put forward in various forms over the years by economists, project management experts, public sector representatives and others. It became more formalised when the audit profession rose to prominence at a time when public and private sectors wished to demonstrate efforts to reduce risk, curtail unnecessary spending, and avoid the waste of funds during times of economic crisis[2]. Only recently has it emerged as a formal concept in the development and humanitarian sectors. At a time when all development partners are trying to do more with less, VfM has become an essential criterion against which many donors and development organisations have begun to evaluate the delivery of their programmes and approaches. It could be said that partnerships and collective impact as development paradigms became part of that conventional wisdom at the same time and with the same general objective: doing more with less.

While there is no single definition of VfM across the many fields in which it is used, it is generally accepted that organisations should use the creation of VfM as an objective in implementing their development and humanitarian programming. They should do so to ensure that they are achieving the best possible outcome from their programming, and maximising the use of inputs for any given output while minimising the cost of the activities needed.

There are a few commonly agreed themes to VfM, captured in the many definitions put forward by diverse organisations; the UK Treasury, for example, defines the concept as follows:

“Value for Money (VFM) is the optimum combination of whole-of-life costs and quality (or fitness for purpose) of the good or service to meet the user’s requirements”.

Importantly, VfM distinguishes itself from simple economic analysis in which only the cost is considered as a marker of value. Instead, it considers economy, efficiency and effectiveness as important elements of value creation. OECD and the UK National Audit Office[3] concur on the following definitions of each of these three terms:

  • Effectiveness is successfully achieving the intended outcomes from an activity.
  • Efficiency is maximising output for a given input.
  • Economy is minimising the cost of resources used for an activity.

Using these concepts, many organisations have created formulas for the calculation of VfM in which effectiveness equals outcome over activity; efficiency is output over input; and economy is activity over cost.

Value for money assessments begin with the assumption that development and humanitarian work should be carried out as efficiently, effectively, and economically as possible, with a view to ensuring that funds invested have maximal impact on the communities that are receiving assistance. As aid budgets become tighter, VfM’s relevance becomes increasingly clear and the need to ensure value is added to the list of performance indicators of sound practice in development and humanitarian assistance.

In addition to these three elements, many organisations, particularly those working in the development and humanitarian field have begun adding their own elements to the calculation of value for money. For example, the Department for International Development (DfID), responsible for the UK’s aid program, has added equity to its criteria for assessing value for money. The argument here is that if it were not for equity, value for money assessments would often draw initiatives away from the poorest and most vulnerable. The addition of this kind of criteria allows for better consideration of the challenging circumstances in which development and humanitarian initiatives take place.

While the definitions are relatively straightforward, there are different nuances in the way they are applied. There are good explorations and debate[4] over the application of value for money and its relevance in humanitarian and development programming. For instance, it is said that VfM calculations could drive decision-makers away from supporting the most vulnerable in favour of working in areas where better results can be achieved for the resources, inputs and activities required. A recent OECD consultation stated: “Applying the concept is possible and useful, but it is also subjective and different donors do so differently. The crucial starting point is to define i) clear objectives and ii) clear parameters (such as acceptable timeframes and levels of risk) in each case and at different levels. So while different donors and organisations have achieved varying levels of progress in applying the concept of value for money − whether they call it that or something else − the focus now should be on taking the discussion further in order to raise the bar in practice and achieve as much as possible with aid funds.”

VfM and the Skills for Negotiation project Myanmar

The Skills for Negotiation Project was designed to build skills in negotiation, enabling stronger participation in law making and development planning by stakeholders in two locations in Burma / Myanmar. The outcome sought from the project was a contribution to the country’s transition from conflict and authoritarianism to democracy. The inputs included the teams mobilised by each of the 4 partners for delivery and oversight of the activities and the administrative and logistic resources needed to support programme activities. The activities themselves focused on the design and delivery of a training program and the preparation and implementation of a case study development process. The outputs were the training workshops, the case study and the partnership management. The case study focus was on collaboration in action at the strategic, operational and community levels. It was conceived as a way of contributing to practitioners’ learning about collaboration – about the process, the relationships, the challenges and the potential for a new way of working in Myanmar.

In a cursory VfM assessment of the project, it could be concluded that while the Skills for Negotiation was effective – it achieved the desired outcomes for the specific activities provided – it was not economical or efficient, particularly given the partnership approach required considerably higher management inputs than necessary for the outputs created. What this assessment would not capture, however, is the value related to the creation of the case study and the benefit to the partners of the experience and the lessons learned, to be reinvested in the longer term. If one of the objectives of development programming is to support sustainability, these kinds of lessons need to be learned, captured and reinvested. Current thinking on value for money does not provide a clear way of accounting for such learning or investments in creating indirect benefits and outputs from development and humanitarian programming[5].

VfM for partnerships

Given the assessment of the Skills for Negotiation project, it might be tempting to dismiss the partnership model of delivery in certain contexts as being too inefficient and uneconomical, and to generalise that assessment for the whole of development and humanitarian programming. Yet, partnership is often put forward as an essential tool, one that is critical to creating value for money in the delivery of development and humanitarian programming.

The North-South Institute (NSI), a Canadian development research organisation, describes cross sector development partnerships (CSPDs) in a recent report as “an important way of achieving overarching development policy goals. Such collaborations have the ability to turn divergent interests into engagements that combine the unique capabilities and resources of each actor to deliver outcomes that surpass those of any sector acting in isolation[6] NSI goes on to a review of the academic and policy literature on value creation in cross-sector partnerships across disciplines, outlining key types of value, their sources, and how value is impacted by partnership types, which in turn impacts outcomes for individuals, organisations, and societies. The report does not, however, consider value for money propositions, or assess the potential alternative delivery models, or consider the costs of partnership management.

Further to this, a SIDA assessment of value for money states that “partnership and outsourcing is another area that is critical to VFM[7], but cautions that the evolution of partnership strategies is something that key humanitarian actors “will need to navigate carefully, given the implications of this trend for VFM in terms of cost effectiveness[8]. In addition, much of the literature on the subject states the fact that in the development and humanitarian sector, many partnerships arise from necessity, where the partners convened are the only ones capable of delivering the support required.

Much as there is debate around the relevance of using VfM to measure humanitarian and development programming, so too is there debate around the use of partnership in humanitarian and development programming. In each case, the global initiatives and partnerships used to deliver them often seem too vast, complex and important to be subject to value for money calculations. In thinking about how VfM could usefully be applied to partnerships, it is worth considering OECD’s assessment of VfM in development in which they state that VfM should be applied as a concept rather than as a straightjacket [9]. In particular, the OECD makes the point that VfM can be very useful as part of good management and sound development practice. This point resonates with both development and partnership professional insofar as one of the biggest challenges of partnership work in development and humanitarian programming is maintaining a balance between supporting the achievement of desired results and the necessary emphasis on process[10]. This is particularly relevant given the fact that organisations’ existing structures, systems and rules are rarely conducive to partnership work and often present obstacles to the creation of effective, efficient and economical relationships or management structures.

While the VfM assessment of the Skills for Negotiation project does not allow us to conclude that the project provided good value for money, it illustrates the challenge presented by VfM to provide a means for considering the value generated from the partnership process, the learning of the partners and participants in the project. Depending whether the right balance was struck, it is conceivable that the higher transactional costs of partnerships could be offset in VfM calculations by the value that the process itself creates.

VfM and the partnership broker

Given the growing importance of value for money calculations in the development and humanitarian sector and the difficulty of applying these calculations in the context of partnerships and given the complexity of allocating value to process and learning considerations, it is worth reflecting on how the partnership broker should support consideration of VfM in the brokering role.

In the case of the Skills for Negotiation project, for instance, the inclusion of VfM by the broker might have led the partners to select a different way of collaborating or assisted them in reconsidering the management approach used to govern the partnership and activities. It might also have led them to conclude that the added value of the partnership was not sufficient to offset the transactional costs of the partnership approach. If that had been the case, it is important to ask what might have been lost and whether a clear value can be assigned to the benefits created through the partnership experience and the development of the case study. What emerges from the analysis of this experience through the VfM lens, however, is that the broker could play an important role in supporting partners to assess their partnership options in accordance with the principles of VfM. In so doing, the broker could highlight the following:

  • Partnerships require creative forms of engagement to demonstrate value for money. The broker can play an important role in supporting the examination of value and assist partners in accurately capturing the value propositions of partnership as a delivery method.
  • Value for money, like partnership itself, needs to be better defined and understood by partners and parties in any context, particularly in the development and humanitarian sector that covers a very broad range of collaborative approaches and options.
  • The broker can support partners to include goals and outcome statements for their development and humanitarian programming that will capture and account for the value of the partnerships process and the indirect value created through a partnership model for delivery.
  • In the context of humanitarian and development work in particular, the importance of finding the right balance between process and outcome, and careful consideration of the cost and value proposition put forward by the partnership, including consideration of who benefits must flow to the partners or the beneficiaries of the partnership’s programming.

As partnership becomes an increasingly important mechanism for the delivery of humanitarian and development programming, brokers will have an exciting new role to play in understanding these concepts and how to integrate them into the partnership brokering process. The ability of brokers to manage VfM discussions will be another feather in the multiple hats that partnership brokers wear and the different roles they play in the fulfilment of their role, including as business managers. Brokers are expected to keep in touch with new developments, apply the most appropriate tools and innovate where necessary to bring in different or better ways of managing the partnering process. VfM offers a useful tool in helping understand the cost and benefits of partnering – one that goes beyond transaction costs to seeking richer outcomes from brokered partnerships.


Author

E.Poupart

Emily Claire Poupart is from Northern Quebec, Canada and was one of the internal brokers on the Skills for Negotiation Project during her tenure at Agriteam Canada Consulting Ltd. Since the end of the project, she has left Agriteam’s Business Development Team to join International Planned Parenthood (IPPF) as Sustainable Networks and Partnerships Advisor.

She has completed Level 2 Training Skills Certificate and is continuously exploring the role of partnerships in international development contexts. Emily is a Rhodes Scholar, holds an LLM from Oxford Brookes University, an MA in Conflict Analysis and Dispute Resolution from the University of Victoria, and a BA in Political Science from McGill University.

 


[1] It can be downloaded from http://partnershipbrokers.org/w/wp-content/uploads/2010/08/Case-Study-Collaboration-Complexity-web.pdf

[2] IDRC, Donor Partnerships Division, The Value-for-Money Discourse: Risks and Opportunities for R4D, Partnership Practices – #3b, August 2013.

[3] Consultation draft, Value for money and international development: Deconstructing some myths to promote more constructive discussion. OECD.

[4] There are a number of good analyses and discussion papers covering the topic, including the OECD’s Consultation draft, Value for money and international development: Deconstructing some myths to promote more constructive discussion; and Baker, Jock. Ester Dross, Valsa Shah, Ricardo Polastro. Study: How to Define and Measure Value for Money in the Humanitarian Sector, Final Report, 2013:29, Sida Decentralize Evaluation, Sida.

[5] In a recent paper (IDRC, Donor Partnerships Division, The Value-for-Money Discourse: Risks and Opportunities for R4D, Partnership Practices – #3b, August 2013), IDRC proposes a methodology for calculating the value of research initiatives in development that could be adapted for partnerships.

[6] The Value of Cross Sector Development Partnerships, North-South Institute, January 2014, Shannon Kindornay, Stephanie Tissot, and Nabeel Sheiban, p. iv.

[7] Baker, Jock. Ester Dross, Valsa Shah, Ricardo Polastro. Study: How to Define and Measure Value for Money in the Humanitarian Sector, Final Report, 2013:29, Sida Decentralize Evaluation, Sida, p. 9.

[8] Ibid. p.49.

[9] OECD, Consultation Draft, Value for Money and International Development: Deconstructing some Myths to Promote More Constructive Dialogue.

[10] Jennifer M. Brinkerhoff, Partnership for International Development: Rhetoric or Results? Lynne Rienner Publishers, Jan 1. 2002 – Business & Economics, 205 pages. p. ix).

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